The market is seeing solid gains after bouncing off seven-month lows last week. There are still some risks in the market. However, World Gold Council (WGC) analysts say last month’s selling pressure is a buying opportunity for investors.
The yellow metal benefits from safe-haven demand, but…
cryptokoin.com As you follow from , the shiny metal price started the week with an upward move. December futures contracts traded at $1,886, the highest level in the last week. Thus, prices are up 3.7% from last week’s lows. But the WGC says gold has a tough hill to climb after seeing significant selling pressure. Analysts say September was the fourth consecutive month of breakout in gold-backed exchange-traded products. It also notes that prices fell about 4% last month.
Gold is currently benefiting from safe-haven demand following renewed chaos in the Middle East. But analysts also note that gold remains sensitive to rising bond yields as persistent inflation and the Federal Reserve’s pledge to keep interest rates in restrictive territory have created record bond selling.
The oversold situation in the market is a buying opportunity!
Some analysts say that although bonds are oversold, there is room for them to fall further. They note that this will increase bond yields. The WGC says this conflict could create some volatility in the gold market during the fourth quarter. In their latest market comments, analysts underline the following points:
With bond yields continuing to rise along with the still buoyant US economy, gold is likely to face continued turbulence over the next few weeks. However, we do not think that a significant downward trend will occur due to fragile stocks, increasing recession risk, inflation volatility and the continued interest of central banks in gold. This could create a buying opportunity for some investors if the market is excessively shorted.
The biggest pressure on the gold market
Lackluster investment demand remains the biggest pressure as investors flee the ETF market. WGC says there was an outflow of 59 tons worth $3 billion from global gold-backed ETFs last month. In this context, analysts make the following statement in their latest ETF market analysis:
Year-to-date global outflows have reached $11 billion. And total assets are down 189 tonnes so far this year. In general, investors’ increasing expectations that interest rates will remain ‘higher for longer’ have led to a decrease in investments in western markets.
North American-listed funds set the tone for the market last month. The report states that regional funds removed 35 tons of gold worth $2 billion from the market in September. In this regard, “The Fed paused throughout the month, in line with expectations. However, it significantly revised upward its forecasts for US economic growth and the 2024 median interest rate. This strengthened investors’ expectations that interest rates would remain high for a longer time. Thus, it reduced the interest in gold,” he says.
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